How Much Does Oil Price Account for the Volatility of China’s Trade Balance?

摘要

In this article, we are trying to find out the relationship between the volatility of international oil price and China’s trade balance. We analyze the supply, the demand and the import of crude oil in China. We work out the price elasticity of oil import by means of OLS. Then the relationship between volatility of oil price and China is shown by plotting the oil price against the trade balance. There is one certain observation we could make that the oil price is robustly negative related with the trade balance. The mechanism of it should be: the international crude oil price affects China’s export and import and in turn it has negative effect on trade balance.